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Nigerian manufacturers are battling with various challenges which ultimately affect their productivity, capacity utilisation and especially competitiveness.
The Manufacturers CEOs Confidence Index (MCCI) survey conducted by the Manufacturers Association of Nigeria (MAN) in the first quarter of 2019 showed various issues hurting Nigeria’s productive sector.
According to the MCCI, CEOs confidence stood at 51.3 points in the first quarter of the year, slightly above the 50 points benchmark of a good performance. Issues around foreign exchange, bank lending rate, government capital implementation, multiple taxes, overregulation and raw materials were identified by chief executives of Nigerian firms as some of the challenges dragging the growth of the sector backwards.
The effect of these recurrent challenges can be felt in the sector’s level of production, global and local performance as well as its contribution to the country’s real gross domestic product (GDP).
In the fourth quarter of 2018, the manufacturing sector’s contribution to the country’s GDP remained stagnant at its 2017 level of 8.86 percent, according to the National Bureau of Statistics (NBS) figures.
The NBS data also showed that Nigeria’s total non-oil export in 2018 were worth $3.3 billion (N1.19 trillion), which is just a fraction of Bangladesh’s $33 billion earnings from ready-made garment (RMG) sector in 2018.
Access to funds
Data from MAN show that lending rate to the manufacturing sector averaged 22.21 percent in 2018 and 22.84 percent in 2017.
However, the current repo rate (central bank lending rate to commercial banks) in South Africa is 6.75 percent while the prime lending rate (lending rate to customers) is 10 percent.
Similarly, Kenya Central Bank’s monetary policy committee cut the determining bank rate in late July 2018 to 9 percent, from 9.5 percent.
Zambia’s benchmark lending rate is 9.75 percent as of February 2018, while Ethiopia’s … Read More...